In the wake of the growing competition for funds and the biggest weekly gain since the stock market gained last week in June, the marginal debt growth of subscription stocks has expanded to the maximum in six months, exacerbating the risk of capital outflow in the bond market.

Gao Shanwen, chief economist of Anxin securities, predicted that if the bubble burst in China's bond market, losses could be borne by banks, resulting in a decline in the banking sector and the adjustment of A shares, which could also impact the credit market and the real economy.

He also predicted that

There will be pressure to depreciate 10%-15% in the next two years.

In addition to warning about the risk of bubble bursting in China's bond market, Gao also said in an exclusive interview with Bloomberg news that before the RMB was included in the IMF SDR basket, the Central Bank of China should tend to maintain stability in the exchange rate. Whether or not to join the SDR currency basket will not fundamentally affect cross-border capital flows.

Although the market has worried about the RMB exchange rate

Recently, China's bond market has gradually subsided, but the volatility of the Chinese bond market has not subsided.

The repurchase paction allows investors to use the current holdings of bonds as collateral for the day's loans. On Monday (October 19th), the loan reached a record high of 2 trillion and 100 billion yuan (330 billion dollars) in the past year.

The interbank market

It has risen to 1.89% from its five year low of 1% in May, after a sharp concussion, reaching 11.74% in 2013.

The investment manager of China Merchants Bank in Shanghai says there are signs of overheating in the market, and it is clear that the stock market will not rise for a long time.

The leverage of the bond market has reached the highest level in history.

If the stock market continues to perform well or the IPO is restarted, the rise in the bond market which will be triggered by liquidity will end.

On the Shanghai stock exchange, the cost of borrowing for similar contracts rose to 2.21% as share prices climbed.

The minimum credit interest rate in 6 years has been questioned by a steel trader who has postponed repayment.

On Tuesday (October 20th), China Steel Group, a state-owned steel trader, failed to repay the interest of 2 billion yuan originally due on 2017.

China Steel Group has postponed the date of early repayment.